Ibovespa Drops as Slower China Growth Dims Export Outlook

By Ney Hayashi -
May 2, 2013

The Ibovespa (IBOV) retreated from a three-
week high as a report that showed the pace of Chinese
manufacturing slowed last month rekindled concern that growth
will falter in Brazil’s top trading partner.

Brazil’s benchmark equity index lost 1.1 percent to
55,321.93 at the close of trading in Sao Paulo. Fifty-four
stocks declined on the gauge while 14 advanced.

“We had weak economic data in China, which is an important
trading partner for Brazil, and that’s having a negative impact
on the market,” Alvaro Bandeira, a partner at Orama Asset
Management, said by phone from Rio de Janeiro.

China’s Purchasing Managers’ Index fell to 50.4 in April
from 51.6 a month earlier, according to HSBC and Markit
Economics. That compares with the median estimate of 50.5 among
economists surveyed by Bloomberg. Readings above 50 signal
expansion.

Growth Concern

“Markets are being affected by concerns about the pace of
global growth,” Caramaschi said in a phone interview from Sao
Paulo.

Sul America dropped 4.8 percent to 14.10 reais. The company
posted adjusted net income of 23.6 million reais in the first
quarter, trailing the average forecast from analysts of 85.5
million reais, according to data compiled by Bloomberg.

“The figures released yesterday may increase market
concerns over a potential deterioration in the company’s
operating performance” in the second quarter, Banco Espirito
Santo de Investimento SA’s analysts Gustavo Schroden and Mateus
Renault wrote in a report today.

Ibovespa Valuation

The Ibovespa has retreated 13 percent from this year’s peak
on Jan. 3 amid concern accelerating inflation may curb Brazil’s
economic recovery and the government’s interventionist policies
will hurt profits in industries including utilities and energy.
The MSCI BRIC Index of shares in Brazil, Russia, India and China
has lost 6 percent over the same period.

Brazil’s benchmark equity gauge trades at 11.4 times
analysts’ earnings estimates for the next four quarters,
compared with 10.5 for the MSCI Emerging Markets Index of 21
developing nations’ equities, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 8.18 billion
reais today, according to data compiled by Bloomberg. That
compares with a daily average of 7.68 billion reais this year
through April 29, according to data compiled by the exchange.